The Government of Canada introduces new Productivity Mega Deduction to help businesses invest, grow and create jobs in Canada

GATINEAU, QC, Sept. 29, 2026 /CNW/ -- Canada has what the world wants: abundant energy and critical minerals, the most educated workforce in the world, access to 1.5 billion consumers through our free trade agreements, and the strongest fiscal position in the G7. We are building on these advantages to make Canada the best place in the world to invest, build, and grow.

Today, the Honourable John Zerucelli, Secretary of State (Labour) participated in an event highlighting how the federal government is helping Canadian businesses of all sizes invest in new equipment, adopt new technology, expand their operations, and compete at home and around the world. This will create the conditions for a new era of investment in Canada.

At the centre of this work is the new Productivity Mega Deduction, one of the most significant changes to Canada's business tax system in half a century. It will allow businesses to immediately deduct the full cost of a much broader range of investments, giving them a powerful incentive to build, expand, and create good jobs in communities across Canada.

This game-changing new tax incentive will increase the amount of assets eligible for immediate expensing from roughly 15% of assets to more than 65%, including fibre-optic cable, greenhouses, mining property, oil and gas pipelines, software, research and development, computer equipment, aircraft and vehicles, patents, rail track, bridges, and roads.

The federal government is also making immediate expensing permanent, giving businesses the long-term certainty they need to make major investment decisions. Together, these changes will reduce the cost of investing in Canada and lower the marginal effective tax rate on new business investment from roughly 13% to 6.4% % – the lowest of any major economy in the world and less than half the rate in the United States.

In an increasingly uncertain world, Canada is choosing to build. By cutting taxes on new investment and moving with speed and ambition, we are setting the conditions for a Canadian investment supercycle--one that will drive growth, productivity, and prosperity for generations.

Quotes

"In this period of global uncertainty, Canada is turning our strengths including talented workers, innovative businesses, and strong finances, into a competitive advantage.  With the lowest tax rate on new business investment in the G7, we're attracting investment, driving growth, and creating good jobs for Canadians."

- The Honourable John Zerucelli, Secretary of State (Labour)  

"This is one of the most significant changes to Canada's business tax system in half a century, and a game changer for investment in this country. With the Productivity Mega Deduction, we are reinforcing Canada's position as the most competitive country in the G7 for new business investment and setting the conditions for an investment supercycle. This is about unlocking investment at a scale we have not seen in generations, so businesses can build, expand, and grow in Canada – creating high-paying careers and building a stronger, more productive and more resilient economy."

- The Honourable François-Philippe Champagne, Minister of Finance and National Revenue

Quick Facts

• Over five years, the government's capital investments and incentives in support of third parties, totalling about $280 billion, are expected to enable more than $1 trillion in total investment from public, private, and institutional partners.
• Canada consistently ranks among the top destinations for foreign direct investment confidence, with a AAA credit rating, the lowest net debt-to-GDP ratio in the G7, and the number one ranking among G7 countries for banking stability.
• Canada has the best tax treatment for new business investment in the G7.
• Under Canada's capital cost allowance system, taxpayers deduct the cost of depreciable assets such as machinery and equipment over time. Immediate expensing would allow them to deduct the full cost of an eligible investment in the first year the asset becomes available for use.

Related products 

• Government of Canada introduces new Productivity Mega Deduction to boost Canada's advantage as the most competitive G7 country for new business investment

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SOURCE Employment and Social Development Canada

Contacts: For media enquiries, please contact: Ty Willness, Press Secretary, Office of the Secretary of State (Labour), [email protected]; Media Relations Office, Employment and Social Development Canada, 819-994-5559, [email protected]